Purchase & Rehab Programs
Below are two sample options of the programs for purchase and/or purchase with rehab. Just know as you look over this that not every loan fits into these two options. Good news… We do our own underwriting!! No lengthy approval process like working with a bank. We have lots of room to move one way or another so these programs aren’t set in stone. We can get creative with cross collateral or other ideas in lieu of a traditional cash down payment as well. Both options below are the same on the following requirements: Borrower must be clearly buying for a business use (non-owner occupied) either by titling as an LLC or have a personal track record of flipping houses or owning rentals. We are well known for: being fair partners to our borrowers, being almost always available by phone, and for our easy draw system. Call us today with your project needs!
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Overview of Fees, Rates and Other Terms
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The loan fee and interest rate are variable based on the project, experience of the borrower, and down payment amount.
Loan Fee: Typically the loan fee is 2.0 to 2.5 points, with each point based on 1% of the loan amount, and we have a $3500 flat loan fee for loans under $175k.
Interest Rates: Typical Range is 10% - 13%.
Closing Time Frames: We can close in as little as 5 business days, but prefer 10 or more so we can get the best fees and rates for you.
Length: Most loans are 12 months in length but we do have longer options.
Sample Scenarios:
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Two sample scenarios of our program for purchases and flips are below. These examples are based on a $300k purchase price only loan, and a $300k purchase price loan with $75k additional for repairs, but we can create other samples over based on any purchase price or scenario, just let us know what you need. Please note: each of the examples below contain three items marked “*”. The actual cost of those items will not be known until a subject property is identified, and the loan amounts below would adjust (increase or decrease) once we know how much these costs are. (All information shown below is intended to be a sample estimate of what these loans like and all figures are subject to change based on your project.
OPTION A- PURCHASE LOAN: You bring in a minimum of 20% down of the purchase price to closing and we fund the remaining amount necessary for the purchase plus we add the closing costs into the loan. More down payment is needed if the price is higher than $325k or if the situation with the house or one of the borrowers is unique.
OPTION B- PURCHASE LOAN WITH REHAB FUNDS: You bring in a minimum of 20% down of the purchase price to closing and we fund the remaining amount necessary for the purchase plus we add the closing costs PLUS money for rehab that you can draw back out as you do the work. More down payment is needed if the price is higher than $325k or if the situation with the house or one of the borrowers is unique.
Sample Scenario OPTION A (purchase money only):
Purchase Price of House/Property: $300k
Total Down Payment at Closing=$60k (20%, subtract any earnest money deposit you put down from this figure)
Subtotal Needed= $240k
Costs of the loan are then added to the subtotal to create the final Loan Amount:
Add the following Section 1 and Section 2 to the Subtotal Needed (above) to create the Loan Amount:
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Section 1- Closing Costs:
Loan Fee (2.0% of subtotal needed)= $4,800
Title and Escrow= $1,800* (*estimate; title company controls this cost)
Servicing/ Payment Collection= $250
Section 1 (Loan Fee, Title and Escrow, Servicing) = $6,850
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Section 2- Property Taxes and Prepaid Interest:
Buyers Portion Property Taxes= $1500*
(*estimate; depends on time of year and the cost is split between the buyer and seller, property taxes must always be current at closing)
Partial Month Interest (typically from date of closing to the end of the month we close in)= $1,200*
(*estimate; usually around 15 days are paid up front and your first payment begins around 45 days after closing.)
Section 2 (Property Taxes and Partial Month Interest)= $2,700
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Total Costs= $9,550 ($6,850 Section 1 + $2,700 Section 2)
Add Subtotal Needed to Total Costs to create Loan Amount ($240,000 plus $9,550 = $249,550)
Grand Total/ Loan Amount: $250,000 (rounded up to nearest $1k; any difference is credited to you)
Other Terms-
Rate= 12.000%
Payment= Interest Only ($2500.00 per month in this example)
Term= 12 months
Minimum Payment Requirement: 4 months payment are required, thereafter no prepayment penalty.
First Payment Due Date: Approximately 45 days from closing
SUMMARY of OPTION A- At closing of the purchase you would bring in $60k minus whatever earnest money you already put down on deposit. We will fund the balance needed for the purchase price and the closing costs in the form of a 1st mortgage loan against the property. You do all the repair and rehab work from your pocket. When you sell the home, the loan is paid back.
Sample scenario OPTION B (purchase money with rehab funds included for future draws):
Purchase Price of House/Property: $300k
Total Down Payment at Closing=$60k (20%, subtract any earnest money deposit you put down from this figure)
Needed for Purchase= $240k
Add Rehab Funds: $75k (this means your project needs $75k worth of work)
Subtotal Needed= $315k
Costs of the loan are then added to the subtotal to create the final Loan Amount:
Add the following Section 1 and Section 2 to the Subtotal Needed (above) to create the Loan Amount:
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Section 1- Closing Costs:
Loan Fee (2.25% of subtotal needed)= $7,087
Title and Escrow= $1,900* (*estimate; title company controls this cost)
Servicing/ Payment Collection= $250
Section 1 (Loan Fee, Title and Escrow, Servicing) = $9,237
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Section 2- Property Taxes and Prepaid Interest:
Buyers Portion Property Taxes= $1500*
(*estimate; depends on time of year and the cost is split between the buyer and seller, property taxes must always be current at closing)
Partial Month Interest (typically from date of closing to the end of the month we close in)= $1,200*
(*estimate; usually around 15 days are paid up front and your first payment begins around 45 days after closing.)
Section 2 (Property Taxes and Partial Month Interest)= $2,700
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Total Costs= $11,937 ($9,237 Section 1 + $2,700 Section 2)
Add Subtotal Needed to Total Costs to create Loan Amount ($315,000 plus $11,937 = $326,937)
Grand Total/ Loan Amount: $327,000 (rounded up to nearest $1k; any difference is credited to you)
Other Terms-
Rate= 12.000%
Payment= Interest Only ($3270.00 per month in this example)
Term= 12 months
Minimum Payment Requirement: 4 months payment are required, thereafter no prepayment penalty.
First Payment Due Date: Approximately 45 days from closing
SUMMARY of OPTION B- At closing of the purchase you would bring in $60k minus whatever earnest money you already put down on deposit. We will fund the balance needed for the purchase price, the closing costs and the rehab funds in the form of a 1st mortgage loan against the property. We would set aside the rehab funds of $75k for future draws and as you work on the project you can draw from this. Initially the work is done from your pocket and we reimburse you as things get done. When you sell the home, the loan is paid back.
DRAW PROCEDURE: $75k held / 3 Draws of $25k each. You start the rehab from your funds and resources after closing, keeping a list or spreadsheet of the areas of work and the costs. Once you get to $25k out of pocket in expenses / repairs, you are ready for your first draw. We will need to document the expenses and repairs and take pictures of the work. A draw of $25k will then be issued and the process repeats for draw #2 and the final draw, draw #3.
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For more options or to discuss your project please call or email.
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